STOCKTON - Stockton Arena continued to lose money in 2007, though the loss was less than in 2006, its first full year of operation.

The arena lost $2.1 million in 2007, about $600,000 less than in 2006, according to documents provided by the city in response to a California Public Records Act request.

The loss was greater than the City Council once anticipated - even in its first year, the arena was expected to lose no more than about $1.7 million - but was less than the city resigned itself to lose after the facility posted a $2.7 million loss in 2006. The city had expected to lose $2.3 million last year.

Stockton Ballpark and the Bob Hope Theatre continued to lose money, too, though less than expected. The ballpark lost $398,751, about $200,000 less than in 2006. The Hope lost $194,278, about $21,118 less than the city anticipated, according to documents the city provided.

Oak Park Ice Arena profited, at $6,265, records show.

The venues all are managed by Illinois-based International Facilities Group.

The $69 million arena, part of the city's bid to renovate its downtown, was never meant to be a profit center, built instead to entertain residents and to encourage spinoff investment downtown. Its $2.7 million loss in 2006, however, appalled council members, who pressed IFG to reduce the deficit - the amount by which its $243,000 management fee and other costs exceeded the city's share of ticket, concessions and other revenue.

In response, IFG cut staff, reducing janitorial and security services, for example, officials said. It also reduced other costs: The arena exterior's signature purple lights, for example, were turned off on evenings when there were no events, officials said.

"We are trying to be aware of unnecessary costs," IFG's Brian Watkins said.

IFG also sought - and by some accounts was near - a sale of the arena's naming rights to a corporate sponsor. Guaranty Bank, which had offered the city $2.75 million for the right to name the arena, withdrew its offer in November once evidence of it became public, officials said.

The arena's reduced loss encouraged city officials. City Manager Gordon Palmer said, "I'm just happy we're making a little bit of progress." And City Councilman Dan Chapman, who is president of the hockey and football teams that play at the arena, said, "That's nice, nice to hear. ... I would like to think that that deficit can continue to be reduced as the arena matures."

It is not expected to break even anytime soon.

"Nothing is great until we can wipe it out to be, you know, no loss and a profit," Deputy City Manager Johnny Ford said. "Will we get to that point? We are working very hard. Is it realistic? Probably not for some years."

For the current year, he said, "I would hope that we could go under $2 million. ... I would hope."

But the nation's economic slump, which has hit Stockton particularly hard, could hurt the arena in 2008, Watkins said.

"I see this as being a difficult year," he said. "We are definitely something that people pay for after their houses, after their cars," he said.

Arena General Manager Jacqui James said IFG intends for the arena's losses to stabilize, then decrease once the economy recovers.

Frustrating IFG is that attendance at the arena's events is often not as great as it is for the same shows in other cities.

Singer Josh Groban, for example, played to full houses elsewhere, but his August show in Stockton sold only about 6,000 tickets, about 3,300 short of a full house, arena officials said.

"Honestly, I think the biggest part of it was the economy here," Watkins said.

The arena's operational deficit does not include the $2.3 million the city paid in the 2007-08 fiscal year on the $47 million bond used to help build Stockton Events Center, which includes the arena and the ballpark. The annual payment is to climb to $4.1 million by 2037, when the debt is fully paid.

However, the financial reports also do not include parking revenue the city collected at the garage adjacent to the arena, about $400,000 last year, Watkins said.

Nor does the arena's balance sheet account for the economic benefit to hotels, shops and restaurants downtown, Greater Stockton Chamber of Commerce CEO Douglass Wilhoit said. He said the deficit would continue to shrink as downtown matures, figuring restaurants and shops would drive business to the arena, and vice versa.

"Rome wasn't built in a day," he said.

Neither that position, nor the arena's improved performance in 2007, swayed critics who have claimed since 2004 that the arena's financing was mishandled.

One of those critics, Dale Stocking, called the "downtown benefit" argument "the Exxon Valdez theory of economics." The oil tanker's historic spill in 1989 likely resulted in billions of dollars pumped into the economy to clean up the Alaskan spill, which did nothing to make the environmental disaster more appealing, he said.

Contact reporter David Siders at (209) 943-8580 or dsiders@recordnet.com.